3863.T

• Consolidated Overall Performance

  • Despite a revenue decline in the Paper and Paperboard segment from worsening export market conditions, strong performance from the Life Related segment drove overall consolidated growth.
  • Consolidated revenue increased 3.2 billion yen year-over-year to 889.5 billion yen; consolidated operating profit increased 35.5% year-over-year to 15.0 billion yen, driven primarily by profit growth in overseas operations from Opal's improved profitability and the resolution of prior-year large-scale maintenance shutdown impacts at NDP.
  • Special items included restoration costs from the December 2024 boiler trouble at the Yatsushiro Mill and shutdown losses from labor unrest at Opal, which were offset by gains from sales of policy-held shares and a return gain from a retirement benefit trust. The result was recurring profit of 14.0 billion yen and net income of 7.8 billion yen.

• Domestic Operational Highlights

  • The Nippon Paper Crecia Miyagi Mill, which started operations in fiscal 2024, delivered full-period positive contribution to the Life Related segment.
  • Price adjustments for domestic packaging and household paper have fully taken effect, offsetting rising cost pressures.
  • Functional chemical films in the chemical business saw strong demand driven by mobile device replacement needs, leading to sales growth.

• Overseas Operational Highlights

  • Opal has delivered measurable cost reduction results from unit cost and operational efficiency improvements at the Maryvale Mill, driving significant profit growth.
  • NDP in North America has returned to normal operation after prior-year disruption and maintenance, with sales volume increasing and returning to profit growth.
  • Jujo Thermal continues to face weak demand in the European thermal paper market, leading to continued profit decline.

• Management maintained the full-year 2025 fiscal year (2026 March term) earnings guidance unchanged from the version published on November 6. No upward or downward revision was announced in this third quarter earnings call.

1. Paper and Paperboard Segment: Revenue decreased year-over-year due to weak export market conditions and low domestic demand, operating profit decreased 7.0 billion yen year-over-year to a cumulative 200 million yen operating loss for the first three quarters, though the third quarter alone returned to operating profit. Volume and selling price pressures from worsening export market conditions led to a 2.2 billion yen decrease in profit; stable coal prices offset high recycled paper prices to deliver a net 900 million yen increase in profit; rising labor and logistics costs plus worsened cost performance at the Yatsushiro Mill led to a 4.3 billion yen decrease in profit. Jujo Thermal (JTOy), the segment's overseas subsidiary, also posted a year-over-year profit decrease due to continued weak thermal paper demand in the European market.
2. Life Related Segment: Revenue increased year-over-year, operating profit increased 11.1 billion yen year-over-year. Domestic operations saw sales volume growth driven by the full-period contribution of the 2024-launched Nippon Paper Crecia Miyagi Mill, and strong demand for functional chemical films from mobile device replacement. Price adjustments for packaging and household paper offset rising labor and logistics costs, leading to a year-over-year profit increase for the cumulative third quarter. Overseas operations delivered a 9.7 billion yen year-over-year profit increase: Opal achieved a 4.2 billion yen profit improvement from unit cost and operational efficiency improvements at the Maryvale Mill; North American NDP posted a 5.5 billion yen year-over-year profit increase after the resolution of prior-year cold wave disruption and large-scale maintenance shutdown impacts, with sales volume returning to growth.
3. Energy Segment: Revenue and operating profit decreased year-over-year, with operating profit down 200 million yen year-over-year. The decline was driven by increased maintenance shutdown days and falling selling prices for power linked to lower coal prices.
4. Wood, Building Materials, and Civil Construction Related Segment: Revenue and operating profit increased year-over-year, with operating profit up 800 million yen year-over-year. Growth occurred despite a decline in new housing starts, driven by increased handling volume of fuel chips.
5. Other Segment: Operating profit decreased 800 million yen year-over-year, entirely due to adjustment items such as inter-segment transaction eliminations. Total consolidated sales for the third quarter came to 889.5 billion yen, 3.2 billion yen higher than the prior year; total consolidated operating profit came to 15.0 billion yen, 3.9 billion yen (35.5%) higher than the prior year.

• A boiler trouble incident occurred at Nippon Paper Yatsushiro Mill in December 2024, leading to material restoration costs that negatively impacted Paper and Paperboard segment profitability by worsening cost performance.
• Labor unrest at Opal caused temporary operational shutdown, leading to recorded shutdown losses that impacted overall profitability.
• Continued weakness in global pulp and paper export market conditions has pressured selling volumes and prices for the Paper and Paperboard segment, leading to significant year-over-year profit decline.
• Weak demand for thermal paper in the European market creates ongoing headwinds for Jujo Thermal's profitability.
• A structural decline in new housing starts creates headwinds for the wood and building materials business, though this has been offset by fuel chip volume growth in the current quarter.
• Industry-wide rising labor and logistics costs create ongoing cost pressure across all business segments.

No question and answer content is included in the provided transcript. A link to external Q&A content is provided at https://www.nipponpapergroup.com/ir/library/2025/.